The Edelweiss Group runs the country’s second-largest wealth management business, sold 51 percent stake in the vertical to private equity firm PAG Partners for Rs 2,200 crore on Thursday.
Edelweiss Wealth Management managed assets worth about Rs 1.27 lakh crore from about 6.1 lakh clients, as of June 2020. In the first quarter of FY21, they clipped at a 44 percent cumulative annualized growth rate, from Rs 18,500 crore FY15 to Rs 1.27 trillion. The proceeds from the partnership will go to the group holding company, Rashesh Shah announced, and the companies will further deploy the funds into its various verticals.
Edelweiss’sglobal investment advisory service, which also houses Edelweiss Asset Management, the country’s largest alternatives and asset reconstruction platform, is not part of the investment. The agreement is part of its strategy to demerge the business and follow it with a subsequent listing on the stock exchange. The deal values Edelweiss Wealth Management (EWM)at around Rs 4,300 crore, the company manages assets worth Rs 1.27 lakh crore, the deal unlocks value for shareholders.
PAG last year announced a major expansion of its operations in India
The Hong Kong-headquartered PAG is one of the world’s largest Asia-focused private investment firms and manages USD 40 billion in assets.
After following a ten-year career at the U.S. private equity firm KKRas head of the firm’s special situations and healthcare services private equity group in India,Nikhil Srivastava will join PAG. He will be based in Mumbai, where he will concentrate specifically on leading the effort of PAG’s buyout group, PAG Asia Capital, with respect to investment opportunities in India.
PAG Asia Capital completed raising its third pan-Asian buyout fund, PAG Asia III, in November 2018, with US$6 billion in capital commitments.
Nikhil Srivastava announced he is looking forward to joining PAG to help further develop the firm’s investment business in India. The Indian market is currently in the early stage of a long term growth cycle. PAG’s best-in-class platform and investment experience are a great fit for this market, he also says he is proud to be associated with this team.”
PAG investment will give a boost to Edelweiss’s expansion strategy
Edelweiss Wealth Management (EWM) will be demerged and listed thereafter in due course, the company also said. This is the largest equity raise by Edelweiss Group so far that has been created in the wealth management business.
“The PAG transaction will give them (EWM) a great partner, which will provide them the impetus to expand scope even further. We have started putting in place a path that will see EWM demerged and listed in due course. We are also guided by the Board to seek investment partners in Edelweiss Asset Management (EAM) and GI businesses, and EAM will also be demerged and listed thereafter.The capital surplus that we will generate will help us continue the virtuous cycle of creating and unlocking value that we have followed consistently over the past 25 years,” said Rashesh Shah, Chairman and CEO, Edelweiss Financial Services Limited.
Edelweiss Group’s structure is organized under six business segments – Corporate Credit, Retail Credit, Wealth Management, Asset Management, Life Insurance and General Insurance, with legal entities aligned to these six business segments